Tesla CEO Musk: Incentives For EVs Don’t Make Them Cheaper Than Competitors

Elon Musk argues that current incentives make Tesla vehicles more expensive than Toyota RAV4.

      The interior of a Tesla Model 3 with the view of a car dealership. Tesla slashed prices for the Model 3 and Model Y that outsold Toyota. (BRAM VAN OOST/UNSPLASHED)

Tesla Inc (NASDAQ:TSLA) CEO Elon Musk on Wednesday opined that a lot of the incentives in place for EVs do not make its vehicles immediately cheaper. If a Tesla were indeed as cheap as a Toyota RAV4, nobody would buy the Japanese SUV, the CEO said.

The front end view of a Toyota RAV4. Musk stated that no one would buy a RAV4 if Tesla was cheaper. (KRISH PARMAR/UNSPLASHED) 

“A large number of people are living paycheck to paycheck, and with a lot of debt. They’ve got credit card debt and mortgage debt. So, that’s the reality for most people,” Musk said. As a result, a lot of people can’t wait for a tax credit of $7,500, Musk said, noting that this makes Tesla ultimately more expensive than an RAV4.

Toyota is currently selling the Toyota BZ4e, which is their only EV that is currently in the market. 

The Toyota RAV4 has been an affordable vehicle for the average consumer which is currently starting at $30,000 MSRP.

“I mean, to be totally frank, if our car costs the same as an RAV4, nobody would buy an RAV4 or at least they’re very unlikely to,” the CEO said.

Tesla has been cutting prices on its vehicles in the U.S. since the start of 2023. Though the company also raised prices intermittently, all Tesla vehicles are presently cheaper as compared to the start of the year.

The company’s best selling cars have been the Model 3 and the Model Y as they have been the most affordable vehicle for consumers.

Tesla is currently the number one selling brand in the state of California and the Model Y is the number selling car there. 

However, with rising interest rates, the monthly payments customers pay for the cars haven’t really changed, Musk said.

“When you look at the cost or the price reductions we’ve made in, say, the Model Y and you compare that to how much people’s monthly payment has risen due to interest rates, the price of the Model Y is almost unchanged,” Musk said.

Currently, all the versions of Tesla’s lower-end vehicles, the Model 3 and Y, are eligible for a tax credit of $7,500. Tesla’s cheapest Model 3 RWD starts at $38,990 and even with the tax credit is priced higher than the 2024 RAV4 which starts at $28,475.

“A lot of the incentives in place for EVs including tax credit is very difficult for the average person to access,” Musk said.

Toyota has slowly merged their vehicle from regular gas powered cars to hybrid vehicles ever since the evolution of the Toyota Prius.


Produced in association with Benzinga